AAII Members Mixed About the Dow’s Highs and Treasury Yields’ Pullback

Posted on May 22, 2014 | AAII Survey

This week’s AAII Sentiment Survey special question asked AAII members what they thought about the recent occurrence of the Dow setting new record highs and the 10-year Treasury bond yield falling back below 2.6% at the same time. Members gave several varying opinions that ranged from calling bond yields unsustainable to viewing the stock market as reaching speculative levels. The largest number of respondents, about 18%, attributed the occurrence to the Federal Reserve’s quantitative easing policy. Slightly less than 15% of respondents described the rise in large-cap stock prices and the pullback in bond yields as either being odd or a mixed signal from the financial markets. Nearly 13% of respondents think a flight to safety is occurring.

Here is a sampling of the responses:

  • “Anxiety by investors has people looking for safety.”
  • “Something is askew. Probably the easy money policy.”
  • “It is being caused by the flight to safety due to headline news in Europe, the South China Sea, the Middle East and Africa.”
  • “It’s the result of quantitative easing. The end of quantitative easing will be a disaster.”
  • “I think it’s weird, but we ought to know by now that the markets (and people) are not rational.”